China ready to restart cruises – but with a twist


Beaten international cruise lines are eagerly awaiting the reopening of the Chinese market. They will have to wait a little longer.

China is expected to resume cruises in December, as its economy recovers and the pandemic remains largely under control. The catch is that the international cruise lines that have spent the last decade building the market from scratch are not being invited to the party.

With China’s standard cruise routes to destinations like Japan and Vietnam closed due to global travel restrictions, the country is tiptoeing back with cruises to nowhere that start and end in the Hainan Island, a sunny seaside resort in southern China, non-stop in between.
The government granted the first permit to use this route to Astro Ocean International Cruise Co. Ltd., a joint venture between two state-owned behemoths. International operators such as Carnival Corp. and Royal Caribbean Group, which would need an exemption from Chinese laws prohibiting foreign ships from doing business between the country’s ports, were not allowed to sail.

Zinan Liu, chairman of Royal Caribbean Asia, said he expects mainland Chinese ports to be among the last in Asia to reopen to foreign-flagged cruise ships, which have already been cleared to sail. in Singapore and Taiwan. Among China’s top concerns, Liu said, is the risk of importing the virus through travel.

“We are not worried about Chinese consumers,” Liu said at a virtual industry event in October. “This is the government we are dealing with in China, maybe also in Japan, to regain their confidence in the industry. ”

Carnival, Royal Caribbean, and others have spent the past decade opening up the Chinese market. Those efforts have paid off, with passenger volumes from China increasing rapidly – until the coronavirus pandemic spread across the world and into cruise ships in a series of notorious incidents that put the sector stopped.

The way back was slow. European cruises resumed this summer with testing facilities and medical staff, but operators have canceled or reduced trips as cases spiked in the fall. Taiwan started non-stop cruises in July; Singapore started similar crossings this month.

In the United States, cruise operators must take mock cruises and apply for a boating permit 60 days in advance to get approval from the Centers for Disease Control and Prevention. To satisfy the long list of requirements, some Carnival cruise ships have extended their US navigation hiatus until 2021.

China’s rapid economic recovery has become a lifeline for businesses struggling with reduced demand in much of the rest of the world. U.S. brands from Nike Inc. to Tesla Inc. have found refuge in the world’s second-largest economy, where consumer spending has rebounded and GDP is expected to grow for the year.

Cruise passengers are also betting on this rapid rebound while waiting for the green light.

“We are currently in dialogue with local and central authorities to ensure that we are ready to resume operations as soon as they deem it safe to do so, working on the basis of our security protocols,” said declared Mario Zanetti, commercial director. of the Carnival Costa Cruises unit. “China plays a strategic role for the Costa group”.

The country’s large and increasingly wealthy population contributed to the growth in cruise volumes at a compound annual rate of 38% between 2013 and 2018, according to Chart Management Consultants, making China the world’s second-largest cruise market for travelers. passengers after North America. Nearly 2.4 million people in China cruised in 2018, the latest data available, the majority of them on international fleets.

Yet the first sailing from the Chinese city of Sanya will be by Piano Land, the country’s first luxury cruise ship and the only one operated by Astro Ocean.

Foreign and flagged vessels are not allowed to provide transportation services in China’s internal waters, a restriction that also exists in the U.S. The Chinese government has made an exception for the 25-year-old Piano Land and 13 bridges, which sails under a Bermuda Flag but is Chinese owned and operated.

Royal Caribbean chief executive Richard Fain said the company has no plans to find a joint venture partner in China and is in talks with central and local governments in the country about future crossings.

“Only one small operator has started so far – we don’t think being Chinese or having a Chinese partner would change that,” Fain said in an interview in October. “We think it was working well before the pandemic. ”

Carnival’s routes in China accounted for 4% of its passenger capacity in 2019, according to a security deposit. Before the pandemic, the company planned to expand its fleet in the country, which it says could become the world’s largest passenger market for cruises.

Ted Blamey, director of consultancy firm Chart, said he believes foreign cruise ships will be allowed to reenter China once authorities feel comfortable enough to expand the pilot.

Genting Cruise Lines, part of Malaysian conglomerate Genting Bhd, has received verbal consent from Chinese authorities to deploy a luxury cruise to Sanya from December, according to a person familiar with the arrangement. Genting Dream, under the flag of the Bahamas, will be chartered and operated by a joint venture with a Chinese company, which retains majority control of the entity, the person said.

Genting did not comment.

International cruise lines have gone to great lengths to cultivate the Chinese market before the pandemic. Carnival formed a cruise joint venture in 2018 with state-owned China State Shipbuilding Corp., one of the country’s two shipbuilding giants. The Florida-based company also helped Italian builder Fincantieri SpA set up a separate joint venture with the Chinese company and pass on its know-how in building large cruise ships.

When Costa Cruises brought their “Italy at Sea” trip to Shanghai, the company made sure Chinese passengers would find not only Italian cuisine, but also more familiar spicy hotpots, as well as games of mahjong. .

Royal Caribbean has also chosen Shanghai as the base for some of its newer and more luxurious cruise ships, such as Quantum of the Seas and Spectrum of the Seas.

North America accounted for half of the world’s passenger volume in 2018, while China claimed only 8.3%.

“Even though China has become the second largest cruise market in the world in a relatively short period of time, we have not even … even scratched the surface of the true potential of the Chinese cruise market,” said Adam Goldstein, former CEO of Royal Caribbean and President of the Cruise Lines International Association industrial group.

Write to Jing Yang at [email protected] and Dave Sebastian at [email protected]


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